‘Start-up Nation’ (Israel) Exporting its Businesses to American Shores Maayan Jaffe
‘Start-up Nation’ Exporting its Businesses to American Shores
The California Israel International Business summit, held by the
California Israel Chamber of Commerce on Oct. 22. Photo: California
Israel Chamber of Commerce.
JNS.org – The “start-up nation”—a nickname Israel earned due to its
population’s knack for innovation—is increasingly exporting its
culture of entrepreneurship to America.
A 2012 Pew Research Center study showed that as many as 330,000
native-born Israelis were living in the United States, while other
estimates peg the total current population of Israeli
Americans—including the descendants of those born in Israel—at between
500,000 and 800,000. There are a number of reasons why an Israeli
might decide to come to the U.S., but for those who are innovators,
entrepreneurs, or businesspeople, the move is often based on
necessity. The relatively small market of Israel, a country that is
roughly the size of New Jersey, leaves Israeli companies thirsting for
opportunities outside of the Holy Land.
“Israel is great place to nurture new ideas. But when they want to
scale up, they have to go to the U.S. or Europe,” Benjamin Soffer,
head of the Technology Transfer Office at the Haifa-based Technion –
Israel Institute of Technology, told JNS.org.
Soffer explained that Israeli companies making the move to the U.S.
usually “need to follow the money” and go wherever their top investors
are. Others, he said, think more about vertical market opportunities
(in which vendors offer their goods and services to a group of
customers with specialized needs) or the community and infrastructure
that will be available for their families when they arrive in America.
There are now a dozen Israeli American chambers of commerce around the
U.S. to assist companies arriving here from the Jewish state,
according to a list on the website of the Association of
American-Israel Chambers of Commerce. These organizations try to make
the Israeli companies’ landings softer, but also understand that
recruiting Israeli thought leaders is beneficial for their U.S.
states’ economies.
“Israel is one of the world’s leaders in innovation and there is a
competition to get them to your state,” said Vered Nohi-Becker, head
of the Philadelphia Israel Chamber of Commerce. “We want them to come
here to create good, innovative jobs here, and to help our economy
grow. It is extremely lucrative for local companies to explore
collaborations with Israeli companies.”
“We need to market ourselves to attract those companies,” she told JNS.org.
Ayal Vogel—vice president of business development for RADiflow, a New
Jersey-based Israeli company that creates secure communication
networks for infrastructure such as transportation systems—said there
are three major factors that influence where Israelis decide to do
business in the U.S., and none of them have to do with tax rates or
event cost of living. They are the estimated vertical market, meaning
the customer base; flexibility of the location, meaning how close its
proximity to an international airport with a direct flight to Israel;
and the people—are there other Israelis living there, and will the
Israeli entrepreneur’s family be happy while he or she focuses on
developing the company?
“We look to be away from home but at home,” said Vogel. “Your friends
turn into family, so we look for well-established cities and towns
that have Israeli people like us.”
In the “beltway” area (Washington, DC, and Maryland), Barry Bogage
heads the Maryland/Israel Development Center (MIDC), a partnership
between the local Jewish federation, the state of Maryland, the
Montgomery County Departments of Business and Economic Development,
and the Israeli Ministry of Economy and Trade. MIDC serves as “an
energetic hub of people and activities engaged in promoting
Maryland/Israel trade and investment,” said Bogage.
“It assists both Israeli and Maryland businesses and entrepreneurs in
successfully accessing each other’s markets,” he told JNS.org.
Bogage said Israeli companies will choose to set up shop in the
beltway because of its close proximity to the U.S. government and its
accessibility to defense and cyber-security contracts. He uses a
network of preferred providers to assist Israeli companies in finding
investors and partners, but also all the service providers they would
need to help their businesses come alive and sustain themselves.
“Real estate, employee benefits, accounting, bookkeeping, regulatory
questions, taxes—with one phone call to us, we can set all of that up
[for the Israeli companies],” Bogage said.
Outgoing Maryland Governor Martin O’Malley (who could not run for
re-election this month due to term limits and will be succeeded by
Republican Larry Hogan) has taken many trade missions to Israel over
the last two decades to recruit cyber-entrepreneurs to his state.
Bogage said MIDC has helped 20 Israeli companies open offices in
Maryland, and dozens more to establish development and sales partners
in the area. Yet Technion’s Soffer did not name Maryland or the DC
area in his list of the top U.S. destinations for Israeli innovators.
Instead, he cited Boston, California and New York.
A 2010 study released at the New England-Israel Business Council’s
2010 Life Sciences Summit at Brandeis University in Waltham, Mass.,
revealed the scope and impact of Israeli-related businesses on the
Massachusetts economy—a striking $2.4 billion annually. The study also
showed that nearly 100 companies in Massachusetts are founded by
Israelis or offer products based on Israeli technology, and that
Israeli industry has created 5,920 jobs in the state.
Talia Cohen, executive director of the California Israel Chamber of
Commerce, said some 300 Israeli companies are working in Silicon
Valley and across the rest of the state. She thinks that one of the
reasons Israelis have chosen the area is its high level of
multiculturalism. Not only can they forge U.S. partnerships, but they
can also connect with leaders and funders from across the globe.
Additionally, there are fewer cultural roadblocks for Israelis in
regions with diverse populations. Vogel said Israelis struggle to
understand American culture or how enormous and complex the U.S.
market really is, and that being in a place with others who have the
same challenges can make the transition easier. On the flip side,
Americans are not always accustomed to Israelis’ business style.
Bogage said that Israelis’ “frankness and passion” often shocks
Americans.
“Americans think it is an argument when really it’s just that for
Israelis, there’s no equivocating, no beating around the bush,” he
said.
The attraction of innovation, however, usually wins out. The
Philadelphia chamber’s Nohi-Becker said that while Israeli market
penetration is rising in America, there is the simultaneously growing
presence of U.S. research and development centers and venture
capitalism in Israel. All the while, both Israeli and American
innovators are looking to scope out the “next big thing.”
“There’s a lot that’s thriving here [for Israeli companies in the
U.S.],” said Nohi-Becker.
Comments are closed.
